Investors flee risk as bear markets multiply - BAML
* BAML finds $3.6 bln flows out of equity funds
* U.S. equities lose $2.6 bln
* Tech suffers $0.5 bln outflows, financials lose $1.2 bln
* Tech flows start to peak: https://tmsnrt.rs/2PctVDU
By Helen Reid
LONDON, Aug 17 (Reuters) - Investors pulled billions from
equities this week, shifting into bonds and high
dividend-yielding sectors as Turkey's currency crisis sparked a
global selloff and emerging markets entered bear territory, an
analysis of fund flows showed on Friday.
The market was shifting into defensive mode, Bank of America
Merrill Lynch (BAML) strategists said, noting investors
pulled money out of U.S. equities, technology and financials.
Global equities suffered $3.6 billion of outflows while
bonds saw $2.3 billion inflows as investors moved out of riskier
assets, the BAML strategists said, citing data from EPFR, a fund
flows data provider.
U.S. equity funds saw outflows of $2.6 billion, a turnaround
from the previous week when U.S. funds were leading in terms of
inflows. Funds investing in large-cap stocks were the main
victims of selling, with $2.3 billion lost.
Tech funds had $500 million of outflows, their biggest since
the February global market selloff, in a sign of increased
caution around the sector which drove much of last year's stock
market gains and accounts for 30 percent of MSCI's emerging
China's Tencent this week slipped after reporting
its first quarterly profit decline in nearly 13 years, sparking
renewed concerns the tech boom may be slowing.
Cumulative flows into the sector were showing signs of
peaking, too, strategists said.
Financials saw $1.2 billion of outflows while energy funds
lost $600 million, another sign of investors' growing caution
over sectors more correlated with the business cycle.
Defensives such as consumer staples, utilities, real estate,
healthcare and telecoms, seen as safer for their high dividend
payouts, have been the top-performing U.S. sectors for the past
Healthcare stocks drew $800 million of inflows this week,
driving the total to $5.5 billion over the past three months and
making the sector one of the most "overbought" according to
Pressure on European equities was unrelenting: Europe had
its 23rd straight week of outflows with $2.9 billion pulled from
the region's equity funds. Japan, meanwhile, was the sole region
to see inflows, with $300 million.
In a week where MSCI's emerging markets index entered bear
territory, down 20 percent from the January peak, EM equity
funds saw just $200 million of outflows, while $500 million left
EM debt funds.
Bear markets were multiplying with European banks, European
autos and copper in that category.
BAML strategists also noted more than half the stocks in
MSCI's world index (1,254 out of 2,273) are in
bear territory. By contrast overbought assets were U.S. equities
and U.S. high-yield bonds, as well as healthcare stocks.
Most oversold were European credit, global financials and
materials stocks, as well as Italy, China and Turkey.
The Turkish lira was by far the worst-performing currency,
while Turkish equities were 42 percent below their 200-day
(Reporting by Helen Reid
Editing by David Holmes)
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